Will Roger Penske Buy The IRL?

For the past two to three weeks, I have heard and read a few random rumors and speculation that Roger Penske may buy the Indy Racing League from the Hulman-George family. The first time I heard it, I thought it was ridiculous. But after hearing the idea discussed some; it makes a little more sense…although I seriously doubt that it will ever happen.

But as we head into the long dark and cold off-season of IndyCar racing, it’s one of those subjects that’s fun to toss out there, play devil’s advocate and ponder the “what ifs” and “why nots”. The timing is perfect for someone to buy the struggling league. I agree with Curt Cavin in that the family would not be interested in selling the Indianapolis Motor Speedway. It is too entrenched into the family’s soul and heritage. Selling the IRL is another matter.

The Indy Racing League was strictly the brainchild of Tony George. Since he dropped the bombshell of the formation of a new open-wheel series in March of 1994, the origins of the creation have been debated for years, but it is safe to say it hinged on control and power. Tony George kept the league afloat with family money since its inception. With the economic meltdown of the past year and the almost certain shrinkage of the family’s portfolio, it is strongly believed that the family had seen enough of their fortune being thrown at a league that has yet to turn a profit. It is believed that this was the impetus of Tony George’s ouster shortly after this past year’s 93rd running of the Indianapolis 500.

The family still owns the track and the league. Although it is hard to conceive of them ever parting with their beloved Speedway; the IRL has apparently been nothing more than a sore subject with most of the family for the past fourteen years. They would probably like nothing better than to rid themselves of the perennial money pit. The trouble is…who would want it?

After all, this isn’t some under-capitalized venture that just needs a few tweaks to achieve profitability. No, as hard as it is for someone who loves open-wheel like myself to admit; the IRL has been operating under a heavily flawed business model for some time now. They have been functioning under the delusion that IndyCar racing is just experiencing a slump and it will all come back in due time. As much as I wish that had been the case, this last season has given me plenty of reason to think that every facet of this sport needs to be given a major overhaul in order to assure its short-term and long-term survival.

The other day, I chastised those who complained that the race at Homestead was boring. If you’ll notice, I never said anything about the season being exciting. It wasn’t. The fact that sixteen of the seventeen race winners came from only two teams is not what I call scintillating drama. The closest a season came to resembling the predictability of this season, was in CART in 1994. Of the sixteen races that season, twelve of the winners came from Marlboro Team Penske. They mounted a three-car effort, which consisted of Al Unser, Jr., Emerson Fittipaldi and Paul Tracy. The other four races were spread among three other teams. Michael Andretti won twice for Chip Ganassi, Scott Goodyear won for Kenny Bernstein and Jacques Villenueve won for Forsythe-Green. So at least three other teams got to visit victory lane besides that year’s juggernaut, but it still made for a boring season of racing.

But a lack of competitive balance on the track is just one of many major problems facing the IRL that need fixing – quickly. They face an eroding fan base that is quickly evaporating. What fans they had are finding other ways to spend their money and time. There is also a justified fear out there that once potential sponsors survive this recession and realize they have gotten by pretty well on a reduced budget, it’s likely that those dollars may never find their way back into a sports marketing budget. Averaging a .39 on a niche cable channel that fewer people are getting than just two months ago doesn’t help either.

Add to that a dwindling car count, the added costs for new chassis and engines supposedly for 2012 and a season-opening race in Brazil that doesn’t seem to be able to get off the ground. It all makes for a very nervous and tenuous future, to say the least.

The dilemma facing the Hulman-George family is that they would probably love to be shed of the Indy racing League, but they don’t want to pull the plug on it – not yet. The problem is; who would buy such a distressed property with so many areas in need of repair? If the IRL were a building, a developer would probably just knock it down and start over.

Short of that happening, there aren’t a whole lot of options. This is where Roger Penske’s name keeps surfacing. The Captain has a knack for turning almost everything he touches into gold. This isn’t by luck, however. Roger Penske will get involved with an endeavor ONLY if he thinks it has an excellent chance to thrive. This is why he ultimately walked away from the Saturn deal. After his deal with Nissan-Renault to build cars for the resulting new company fell through, his business model no longer seemed viable. He was not going to put himself in a position to lose money and be involved with a failed concept. Don’t forget what Danny Sullivan once said shortly after his dismissal from Team Penske; “When the music stops, Roger will always have a chair.”

Although it wasn’t exactly meant to be a compliment when Sullivan said it, it speaks volumes about the way Roger Penske conducts business and why he has been so successful. If he doesn’t think it will work, he’s not going to do it. This isn’t to say that Roger Penske won’t take a gamble or a risk. He has taken several risks in his business and racing career. Spearheading the move with Dan Gurney and Pat Patrick in the fall of 1978 to form CART was a very risky proposition. It worked for over twenty years, but when Penske determined that CART had run its course, he left the series he helped found and bolted for the IRL

He also took a chance when he decided to build his own chassis in CART. Many years, the gamble paid off and he had a superior car. Some years, such as the mid-eighties and late nineties, the gamble backfired with an inferior chassis. In both of those cases, Penske was smart enough to set his ego aside and purchase whichever chassis was superior – whether it was a March in the eighties or a Reynard at the end of the nineties. Roger Penske will always do what he has to do to put himself in the best possible position to succeed.

So the questions linger – will he and should he buy the IRL? He could certainly afford it. And if he did actually take the step to buy the league from the Hulman-George family, that would be a sign that he was reasonably confident that he would be able to fix most of the problems and actually turn a profit in the not so distant future.

There would also be the conflict of interest issue. Although it came up when Tony George founded Vision Racing in the league that he also owned, it quickly died down when everyone saw how bad Vision Racing actually was. When they flirted with being competitive at the beginning of 2008, it was because Larry Curry was trying to be a little too lax in his interpretation of the rulebook. He was summarily dismissed by George so as not even give a hint that they were not going to play by the rules. Consequently, Vision Racing was never competitive again until Kentucky in 2009, which was after Tony George resigned from the league.

Team Penske is always at or near the top in every season. Although his team has only won one championship (2006) since moving to the IRL, they have won four Indy 500’s since their move in 2002 and they are always in the mix for the championship going to the last race. Any sign of an unfair advantage within the league, would do more than raise a few eyebrows.

Ultimately, I just don’t see Roger Penske buying the Indy Racing League. He will be 73 before the start of the next IndyCar season. I think that he truly loves competing in the IndyCar Series as a car owner. I’m sure he wants to continue to try to win more Indy 500’s. I think that owning and running the IRL would take away from the joy he gets as a car owner – even if he thought he could make a go out of it.

But his love of competition aside, I don’t think Roger Penske would believe that buying the IRL would be a successful venture for him. If he bought the league and failed to save it from extinction, it would tarnish his golden legacy. Roger Penske has worked too hard to put a black mark next to his name at this point in his life. As Danny Sullivan said…Roger Penske will always have a chair.

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I was going to apply for a job in the marketing dept for the IRL, but over the last couple months since Tony was cut loose I no longer feel safe with that plan. I hear that more people are going to be cut from the offices, sending more work to outsourced independent companies that most likely will not provide the exposure the IRL needs. Has anyone analyzed Just Marketing yet? They’ve been the IRL partner for what 6 years? I haven’t seen a good IRL commercial, placement, activation yet. So it hurts that the job that I have always wanted since I was a kid is not stable enough for me to risk my family’s security on.

I don’t see him buying the series that Chip and Roger share “ownership” already.
I would like to see some sponsor activation from that team. Other than free hats, bags, towel and radio giveaways at the track on race day. At least they aren’t giving away cigarettes anymore!

“Who would want it”. I would love to purchase the IRL I just don’t have enough money. It is easy to say that ever facet needs an overhaul but what is really wrong with it. Everyone offers up broad brush issues, but nobody really ever says how they would fix it. I mean the details of what they would do. It is the greatest racing on the planet but nobody seems to watch. I do not understand it either! Maybe during the off season you could write more on how you would fix it and we could all help.

Tony George spent an estimated 600 million dollars while CART/OWRS spent about 300 million dollars, yet “nobody seems to watch.” You or Penske should provide for broadcasting — a la major network, over-the-air broadcasting — of IndyCar races. Yet who will pay for that? The ICS will buy air time and try to sell advertising time? Deep-pocket sponsors are already clamoring to buy time on the big 4? Without adequate distribution of the ‘on-track product,’ how will the fan base grow, and how will teams gain sponsors who seek exposure?
Exposure/distribution of the sport is one specific issue that has been mentioned previously. Extremely-limited cable & Dish Network television distribution may make IndyCar racing a fringe sport followed only by a few faithful who insist on finding it.
Many fans have complained about race tracks and race scheduling and told that they want more oval races, races at their favorite ovals and natural-terrain courses and less downtime between races (no long stretches).
People have asked for closer competion on some tracks, fewer runaway wins, fewer parades/processions. loosened rules regarding chassis and appendages, more chassis makers and more engine makers.
A push-to-pass button was introduced and the competition director made rule changes mid-season. Many people, including George Phillips, have made specific suggestions, and we await implementation of some.

All good points from Brian McKay, but somebody help me out on this. How much does it cost to buy 3 hours of TV time on a network, say NBC, on sunday afternoon and then how much revenue should one expect to gain from a 30-second add. Also, I am always hearing about how low the TV ratings are but I do not hear many reference points for other racing series, like ALMS, Grand Am, NHRA, or Nationwide. How bad are Indy Car ratings compared to these.

Roger is a succesful businessman because he makes wise decisions with his head, not follish ones with his heart. That is the fundamental difference between him and a guy like Tony George. That’s why he’s to too smart to buy the IRL. Heck, he could have had Champ Car if he wanted it on 2 ocassions and he wisely passed.

Whatever his reasons, it seems like Penske has made a conscious decision to stick to being a team owner. That decisions dates back at least to when he decided to sell his tracks to the France Family’s ISC.

No, I don’t think Penske would buy the IRL. I’m afraid the most likely scenario would be for the France family to buy the IRL, to give them another series to team up with Grand Am on the Twisty’s, and Nationbusch / Trucks on the ovals. I know that’s heresy to a alot of folks, but to be quite honest, it might be the best thing for turning around the fortunes of the IRL. They’d always be 2nd fiddle to Cup racing in that scenario, but they’d be light year’s ahead at getting marketing exposure, and TV time, which would cure a lot of the sponsorship issues that they have. Heck, 2 of the “big 3” teams already run in both series, they could cross promote the hell out of the IRL just by slipping a few Cup drivers into an IRL race, in the same way they slip in and out of Nationbusch, Trucks, and Grand Am whenever they are having trouble selling tickets.

Heresy, I know. Complete heresey, but face facts, the France’s are the only ones with the Dough to buy them, the marketing firepower already in place to tap the potential, the tracks under their own ownership, and most importantly the LEVERAGE with the ABC-ESPN network. Actually, the more I write, the better it sounds.

The only other possiblility is SMI, who is in pitched battle with the France owned ISC, and would like to have a series of their own to use as a pawn in their game. Not the best option, as they’d always be a pawn. What SMI really wants is a bigger slice of the France family pie.

Wow Tom what a concept! The France family buying the IRL would open up a lot of ovals, and could make the series profitable.

However, I imagine the Hulman-George family wouldn’t go for it: the France’s could decide at any point that the IRL isn’t profitable and would shut it down without another thought. What happens to the Indy500 then? Would the France family agree to keeping IRL around (afloat) for 20 years or more as a condition of buying it?

The Hulman-George family views the 500 as their family legacy, and at least for now the IRL is a necessary evil.

ISC and NASCAR do not want any non-NASCAR affiliated series to survive. There’s nothing in it for them to make the IRL work, they’d rather the IRL (and the ALMS, for that matter) just dry up and their tiny sliver of media marketshare jump to NASCAR’s side of the equation. If ISC or the France family ever bought the IRL, their next action would likely be to lock all of the equpiment that they had access to in a warehouse somewhere in North Carolina, all of the personnel would be either laid off or rolled into NASCAR’s staff, and the IndyCar series would never see the light of day again. Well, until somebody else came along an re-started it under some other name. Anyway, NASCAR and ISC need to be avoided at all costs.

You may be right. But the France’s are business people too, and the one thing they like to do above all else is make money. I think what the IRL has to offer them has little to do with the Indycar series really. It has everything to do with F1. Stay with me here…

Despite the behemoth size of N-word, it still pales in comparison to F1. The numbers that F1 generates globally make the GDP of some countries seem small in comparison. N-car cannot be “exported” so it’s growth is limited to North America alone. I think they have bumped into that ceiling in the past few years. That’s where the IRL comes in. Open wheel can be exported outside of the US. Once upon a time the line between Indy and F1 was pretty faint. Drivers and even cars crossed the line back and forth. Since the 60’s though they have diverged, but that’s not to say they have to stay that way.

If N-word bought the IRL they would have the #2 open wheel series in the world. They could use it as a platform to attack F1, which has priced itself out of the market in many places, and left a lot of open tracks, and hungry fans, which is potential $$$ just waiting to be harvested in the eyes of the France Family Inc. I think they could find some willing manufacturers to back the endeavor, which the IRL has struggled with, because they could bring the needed marketing exposure that the manufacturers are looking for. It is also worth pointing out that F1 has turned it’s back on the North American market, which sure can’t make their sponsors and manufacturers too happy.

In this scenario, the IRL would not have to rival, or exceed F1 in terms of worldwide popularity to be effective. There is unment demand for top level open wheel racing, and a France funded CART-Part Duex could exploit that by taking the Indycar Series to the parts of the world that F1 is ignoring (South America, parts of Europe, North America). The 500 will always be the 500 and that prestige gives Indycar global credibility that A1GP, and other open wheel series can never obtain.

I don’t advocate any of this. I’m just speculating, because that’s what is so much fun about these intertubes.

Tom,
I just threw up in my mouth a little. That’s the first I’ve heard anybody take that angle, and I’ve gotta admit, it makes a good deal of sense. ISC picks up the IRL for a song (and a promise of higher exposure), the IRL runs at Imola, Hockenheim, Brands, Magny Cours (because Bernie owns Paul Ricard), Fuji and Montreal, several manufacturers come on board, and Bernie Ecclestone’s head explodes (leaving the rest of us to live happily ever after). Wow….

As much as I hate the thought of all of that coming to pass because the France family owned the IRL, I’d love to see it. Man. These are some complicated feelings I’m having…

Tom: I must disagree with you on this. Sure, OW can be “exported” (like almost everything), but its “sales” are just not guaranteed. I lose count of how many national OW series exist in the EU alone… add the fact that A1GP just went bust (or will soon). CART’s want-A-bee F1 dreams were half-a$$ at best & some could argue it weakened the series back home.

On NAPCAR being business geniuses…. I saw a heluva lot of empty seats @ Charlotte last weekend. They had ISC & others over-build during the boom time IMO. Really study the success of their lower tier series. Nationwide NEEDS Cup drivers to bump it up. The truck series has lost Dodge. Roush was the Ford effort & he has pulled the plug for 2010. Grand-Am puts on decent races , but the cars are hideous & they average about 20 people watching the events live.

Sorry, but I don’t but much faith in them having answers for the Indycars when they have proved that they also can not focus on anything but their “main event”.

Too funny. I have to admit, the thoughts are scaring me too. I was hoping you’d convince me I was crazy. I think I’ve been hanging around my dark corporate overlords too long, to have concocted such a sinister plot.

There is something oddly alluring about the thought of Bernie and the France’s locked in mortal combat. Kind of like watching Hitler & Stalin Square off. (You can guess which one would be Hitler in this analogy 😉 Maybe we’d all be lucky and they would both lose.

I hear you, and you are right about a few point. The France’s aren’t masters of the universe at running a business, and their support series are nowhere without Cup to prop them up. And I agree, making money is Open Wheel racing is far from a sure thing as CART-CCWS-IRL-and A1GP are showing.

However, I don’t think you have to be perfect to succeed and make money. The France family empire is clear proof of that. The product is lackluster, the lowest common denominator often rules the day, but, (and this is a NASCAR sized “butt”, including ample crack 😉 ) Money and Size can cover up a lot of mistakes. Sure, the race on Sunday had a lot of empty seats, but they had more full ones than empties. Put the IRL race at Homestead up next to the Charlotte race and there is no comparison.

I don’t think the France’s buying the IRL is a sure fire homerun, but I do think they have more of the pieces in place to be successful than any other potential buyer, owner, or operator of the IRL has. It will still take a lot of hard work, but the right pieces are there to make it work.

Regarding success overseas, I still stand by my assertion that there is unmet demand for top level OW racing abroad, and that the IndyCar brand has a better chance of succeeding due to the Indy 500 Legacy & credibility than any small upstart OW series like A1GP. However, success will still take a lot of doing, and probably pouring out a lot of cash in the short term to make it stick.

The other fact is that tough times in any industry lead to consolidation, and the companies that typically survive and expand their presence are the bigger ones. It’s the little guys that go belly up. A France owned IRL would be stronger, and well positioned to pick up new sponsors and manufacturers left behind by the folding of A1GP, ALMS, Atlantics, etc…

The biggest drawback to this scenario is what would become of the product. I think that Grand Am is an unfortunately glimpse of what a France owned IndyCar series would look like. Crummy technology, in a butt-ugly package. Of course, many people already say the same about the Dallara-Era IRL.

Oh, but it doesn’t have to be like this. Perhaps if the France’s would just give me all their money and let me run things I could rule the world. yes, that’s it! Look out Bernie, here I come!

Well Tom… I do see your points (can agree with some…) but will have to respectfully disagree with you in general. Plus lets NOT bury the ALMS along with Atlantics & A1GP!!! Perhaps you slipped & typed out ALMS instead of Grand-Am (DP & GT) ❓ 🙂

Sadly the ICS Dallara would be SLOWER than GP2 & the Super League OW packages that Europe has. Also sponsors from A1GP ❓ those were not very plentiful. When CART had 900+ HP cars… that was something you could “export” & win over new fans. Oval cars converted to RC’s with less HP than the EU’s home series is not gonna have the masses rushing the ticket gates!!!

I do agree a new peace with NAPCAR & ISC would allow the Indycars to strengthen its home schedule. Suddenly the ICS could be re-welcomed @ ovals that provided exciting races in the past (& matched their package). This is the only positive I see in regards to Daytona being involved 💡

Yes, it is tough to get too excited about the Dallara on a road course. I hope the new spec, if’n when it ever arrives, changes that aspect of IndyCar.

And I hope I am wrong about ALMS, but some of the stuff I have been reading about them in the past week is bumming me out. One of the saddest things about the past 2 years has been the decline in the ALMS series.

ALMS decline? Yes All-Acura P1 kinda sucked… but even with the rain the 2009 PLM rocked (so did ’08 PLM) 💡 Laguna Seca had two Acuras glued to each other after 4 hours… & GT2 is packed with true factory efforts, giving us some great races.

Plus Highcroft has stated they will be back… IMO, Patron will be flipping the bill for the Acura engine leases being the only difference. Mazda still needs to develop their P2 motor & will have Acura & a private Porsche as their competition.

Sadly, Atlantics has no TV & requires a budget of Indy Lights (how has a slight TV deal & a more direct road to the ICS). Now rumors have Mazda branding the Indy Lights motor… so another sign Atlantics are dead 😦 😦